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The rush to put copper in the US ahead of possible tariffs created a lack of red metal and a dislocation of prices on the continent of Europe.
According to Argus Media, spot markets in the area are suffering from a lack of available copper for immediate delivery.
This has pushed the premium up to a high on the continent. This is paid in addition to the benchmark price of London Metal Exchange, the largest hub in Europe where many stocks are stored.
According to Data Group Fastmarkets, the copper premium delivered to Germany rose to $250 per tonne, while the premiums of Livorno and Rotterdam reached $180 per tonne at the end of April.
Although the market has settled since the announcement of US President Donald Trump’s “liberation day,” the record premium highlights the persistent distortion caused by the threat of tariffs in sectors that are important to industry.
Copper is used in a variety of applications, from wiring to industrial machinery and electronic equipment.
Chinese stocks have recently declined rapidly due to a surge in prices and warehouse supplies to the US.
The global benchmark LME copper prices were trading at around $9,400 per tonne on Friday. This is about $700 cheaper per tonne than the US Comex Exchange.
Copper prices for LMEs rose to more than $10,000 per tonne in March after Trump introduced research into markets that could lead to red metal collection. Meanwhile, US Comex prices jumped to more than $11,500 per tonne at the same time.
European copper group Aurubis said in its revenue report on Thursday that there is “surplus demand” for copper in spot markets around the world. The company added that it was active only in the spot market “to a limited extent” and sold most of the copper on long-term contracts.
Aurubis told the Financial Times that price distortions between London and New York created opportunities for arbitrage, with traders buying cheap metals in Asia and Europe and selling them at premium in the US.
Analysts also said buyers are increasingly considering turning to the copper scrap market, where discounts are significantly narrower compared to LME prices.
According to data from Argus Media, European bare bright copper scrap jumped from 97.50-98.50% to 98-99% of LME prices earlier this year.
“If that hint comes up even in flat LME or premium, that’s when people know that they’re really desperate for copper units,” said Ronan Murphy, head of copper prices in Argus Media. “All buyers were exposed” and “we were worried about getting extra supplies if necessary,” he added.
The higher the European copper premium, the more than about 2% of the overall cost of the metal.
However, buyers are price sensitive, and some end users struggle with higher commodity prices due to trade dislocation and high European electricity prices.
